In this month’s LiveLoveLaughing.com article, we focus on the art of giving away money.
Easier said than done?
Not according to Tim McCarthy, author of Empty Abundance.
“Many Americans are choosing to hold onto their money these days, a lesson learned from the 2008-09 financial crash,” he says. “And it’s good to have savings—but not to the point of hoarding.”
McCarthy points to a US Bureau of Economic Analysis study, which indicates that Americans are saving at a rate of 5.30 percent, well above the record low of 0.80 percent in 2005.
And, according to the new Billionaire Census from Wealth-X and UBS, the world’s billionaires are holding an average of $600 million each in cash, which is more than the 2013 gross domestic product of the Commonwealth of Dominica, an island nation in the Caribbean.
“That’s up from $60 million the previous year, signaling that the very wealthy are keeping their money on the sidelines and waiting for an optimal investment time,” explains McCarthy. “All of us could invest part of our ‘fortune,’ great or small, on something that gives back on a deeper human level, such as non-predatory loans to individuals from impoverished communities.”
McCarthy walks his talk.
He diverts all of his business profits annually to his foundation, The Business of Good, which invests in socially conscious businesses and scalable nonprofit concepts. And, he thinks more people should follow his lead. Here’s what McCarthy says.
What do you have to gain from mindful giving?
- Money does buy you happiness, McCarthy willingly concedes—but only up to about $75,000 a year, according to a 2010 Princeton study. “Life satisfaction changes little once a person earns $75,000 per year,” McCarthy says.
- Another widely published survey by psychologist Roy Baumeister suggested that “happiness, or immediate fulfillment, is largely irrelevant to meaningfulness.” In other words, many people who finally achieve financial excess are not fulfilled by the rewards that come with that.
- Wealth is disconnected to overall fulfillment, notes a Gallup survey conducted in 132 countries that found, not surprisingly, that people in wealthy countries rate themselves higher in happiness than those in poor countries. However, 95 percent of those surveyed in poverty-stricken countries such as Ethiopia, Kyrgyzstan, and Sierra Leone reported leading meaningful lives, in contrast to less than 60 percent of people in wealthier countries.
Why giving money reliably equals happy money.
Behavioral scientists Elizabeth Dunn and Michael Norton focus on this topic in their new book, “Happy Money: The Science of Smarter Spending.”
In it, they address what makes people engage in “prosocial behavior” —including charitable contributions, buying gifts, and volunteering time. They explain that recent research on happiness indicates that the most satisfying way of using money is to invest in others.
In 2010, multibillionaires Warren Buffet and Bill and Melinda Gates co-founded The Giving Pledge, a long-term charitable effort that asks the wealthiest among us to commit to giving more than half of their fortunes to philanthropy.
Among the first to join, Michael R. Bloomberg wrote in his pledge letter: “If you want to do something for your children and show how much you love them, the single best thing—by far—is to support organizations that will create a better world for them and their children.” To date, 115 of our country’s 495 billionaires have pledged.
Anhedonia, amnesia, and the fallacy of consumption.
“Anhedonia is the inability to enjoy activities that are typically found pleasurable,” McCarthy explains. “After making my wealth, I found that I suffered from anhedonia. Mindful giving—intelligent and conscious giving to those who need it—turned out to be my best therapy.”
He also points to the fact that just about everybody has experienced the limits of consumption.
“It’s the economic law of diminishing returns,” McCarthy notes. “One cookie is nice and so, too, is your first $1 million. But at some point, your ability to enjoy eating cookies or earning millions diminishes more with each successive one.”
So what’s the problem?
“The horror is that so many of us succeed in forgetting it,” McCarthy says. “I think that, in every moment, we need to remind ourselves that continually reaching for the next ‘cookie’ is not in our best interest.”
About Tim McCarthy
Tim McCarthy’s first business, WorkPlace Media, eventually built a permissioned database of 700,000 gatekeepers who reach more than 70 million employees with incentives for clients such as Coca-Cola, LensCrafters, and McDonalds.
He sold the company in 2007 and recently bought it back. In 2003, he partnered with his son, Tim Patrick McCarthy, to open Raising Cane’s of Ohio, which had 13 stores with over $30 million in revenue in 2013. McCarthy, author of “Empty Abundance,” earned his bachelor’s in political science and his MBA from Ohio State University.
In 2008, he received the Fisher Alumnae Community Service Award and was named an Ernst and Young Entrepreneur of the Year.
Learn more at: mindfulgiving.org.